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Commonly Referred To Sayings of Warren Buffett

o The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.

o Never invest in a business you cannot understand.

o Risk can be greatly reduced by concentrating on only a few holdings.

o Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.

o Buy companies with strong histories of profitability and with a dominant business franchise.

o You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.

o Be fearful when others are greedy and greedy only when others are fearful.

o Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.

o It is optimism that is the enemy of the rational buyer.

o As far as you are concerned, the stock market does not exist. Ignore it.

o The ability to say "no" is a tremendous advantage for an investor.

o Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.

o Lethargy, bordering on sloth should remain the cornerstone of an investment style.

o An investor should act as though he had a lifetime decision card with just twenty punches on it.

o Wild swings in share prices have more to do with the "lemming- like" behaviour of institutional investors than with the aggregate returns of the company they own.

o As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.

o An investor needs to do very few things right as long as he or she avoids big mistakes.

o "Turn-arounds" seldom turn.

o Is management rational?

o Is management candid with the shareholders?

o Does management resist the institutional imperative?

o Do not take yearly results too seriously. Instead, focus on four or five-year averages.

o Focus on return on equity, not earnings per share.

o Calculate "owner earnings" to get a true reflection of value.

o Look for companies with high profit margins.

o Growth and value investing are joined at the hip.

o The advice "you never go broke taking a profit" is foolish.

o It is more important to say "no" to an opportunity, than to say "yes".

o Always invest for the long term.

o Does the business have favourable long term prospects?

o It is not necessary to do extraordinary things to get extraordinary results.

o Remember that the stock market is manic-depressive.

o Buy a business, don't rent stocks.

o Does the business have a consistent operating history?

o Wide diversification is only required when investors do not understand what they are doing.

o An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.

(extracted from various books on Buffett including "Buffett: the Making of an American Capitalist", "Buffettology", "The Warren Buffett Way" and "Of Permanent Value", "Thoughts of Chairman Buffett : Thirty Years of Unconventional Wisdom from the Sage of Omaha")